Question

Toque Inc. uses the allowance method for bad debts. If management is overly optimistic about its ability to collect customer accounts, the company will understate Bad Debt Expense and:

A) overstate net income and days to collect will decline.

B) overstate net income but days to collect will increase.

C) understate net income and days to collect will increase.

D) understate net income and days to collect will decline.

Answer

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